The purpose of this column is to help you decide whether to keep on working for someone else for a “regular” paycheck, or start your own business and earn your own paycheck.

HISTORY (By Paul)
It wasn’t always this way. Once upon a time most of us were slaves to persons of privilege called “masters”, who in turn were owned by a ruling class of people we now call “government”. Slaves did the master’s bidding under threat of great bodily harm or banishment, both of which often resulted in death. Some masters took minimal care of their slaves by feeding, clothing, and housing them, but for the most part, slaves were ignored until they ceased to be of value to their masters and were then disposed of. We now call this action “firing”.

It wasn’t long before the slave-masters realized that rewards for good work caused the slaves to do better work. Rewards included better food, cover from the weather, and “trinkets”. Slaves were quick to discover that other slaves would trade amongst themselves for these rewards. We now call these actions “pay” and “commerce”.

Giving slaves too much in the way of payment meant it was conceivably they could accumulate enough to break out of the system. We now call this action “freedom”. To guard against this, the concept of requiring slaves to pay a tribute to the owner arose. For this tribute the owner would offer “lifetime protection” to the slave. We now call these actions “taxation” and “social security”.

The owners of slave owners were very rich and powerful and wanted $600 toilet seats, goods, and expendable slaves to fight off other rich and powerful people. To get these goodies, and to control the slave owners (who controlled the slaves), they also extracted tributes. To make sure these tributes were paid, they formed a group whose reason for existence was to collect tributes. We now call these owners of slave owners “government”, and the tribute collectors the “IRS”.

Slaves were still able to break away and set up shops and establishments of their own, and although these renegades competed with the slave masters, they provided so many of the goods and services slave masters valued, and provided them at such a low cost, these renegades were not only allowed to remain in business, they were encouraged. We now call these people “small business persons or entrepreneurs.”

TRIBUTES TODAY (By Paul)
Today a two part system of exacting tributes exists, one of which favors and encourages entrepreneurs. I call these two systems the “W-2” and the “1099” (sometimes “Schedule C”).

If you slave (oops…work) under W-2 you receive a paycheck with many of the tributes already deducted, and you are allowed to spend the remainder on frivolity such as food, shelter, clothing, transportation, education and other desirable things. No, you don’t earn $60,000 a year, you earn $30,000. The slave master’s owner (oops: governments: federal, state, county, city, et al.) take their share out first. They have even devised a method of taking out another share every time you purchase a frivolous thing. We call this a “sales tax.”

If you operate under 1099 you receive the $60,000 up front, you get to deduct the cost of sheltering your business, paying the cost of employees, and other expenses BEFORE you pay taxes on the remainder. It is possible to arrange your business affairs such that you live well and only have to pay taxes on what is left after expenses. Sometimes this can result in $0 taxes!

Of course you will have to hire the services of an interpreter to make sure you comply with the obfuscation and confusion in how tributes ( oops…taxes) are exacted, but even this cost can be subtracted in advance, further reducing your tribute bite. We call these people by the generic name of “accountants”.

COMPARISON
Now which is better? Pay taxes of $30,000 on $60,000 and having to again pay taxes on the frivolous gifts slave owners used to provide their slaves, or paying little or no tax on the same earnings and have all of the perks of ownership along with money to spend on things more or less free of the tribute system?

You have been reading Paul’s simplified and abbreviated view of why going into business for yourself can be one of the most rewarding things you can do with your life. What do you say?

(NOTE TO EDITORS: PLEASE INCLUDE THE FOLLOWING.)
Paul Tulenko is a Small Business Success Consultant based in New Mexico. Additional tips and suggestions are available at www.tulenko.com or call (toll-free) 1-866-TULENKO.